Europa Worldwide CEO Andrew Baxter on RHA, cabotage, goods checks and 2022 plans
2021 has presented yet more challenges to logistics businesses in the shape of Covid-19 and Brexit, yet there have been a number of success stories in the sector in the face of these difficulties. One example of this is the Europa Worldwide Group, who are currently on track to achieve record turnover and profits in 2021. The company attributes a lot of this to its preparations for Brexit and the return to more normal “post-Covid” conditions, while its ‘Europa Flow’ customs product has played its part too.
This has all been overseen by Europa Worldwide Group CEO Andrew Baxter, whose decision to invest more than £5m in Brexit preparations appears to have paid dividends.
Not everyone in the haulage industry has been as prepared, however, and since the turn of the year, the Europa Worldwide Group boss has been critical of the RHA for its approach and messaging regarding pre-Brexit preparedness. The recent resignation of RHA chief executive Richard Burnett has thus brought Baxter’s comments sharply into focus, sparking a debate about how the RHA should conduct itself in the future.
Keen to learn more about what the Europa Worldwide Group CEO would like to see from the RHA, as well as his thoughts on pressing issues such as cabotage and the imminent EU goods checks, we sat down for a chat with Mr Baxter himself.
Read on to find out:
- Why Baxter has taken issue with the RHA’s approach
- Why the practical differences for hauliers between the current deal and no deal are not so large
- Why Baxter thinks the UK Government’s cabotage relaxation was a sensible move
- Why the incoming checks on EU goods arriving in the UK may cause a period of disruption
- How the Europa Worldwide Group plans to expand next year
Hi Andrew, thanks for taking the time to talk to us at Trans.INFO. Earlier this year, in a statement on your website, you revealed that you had decided to resign from your membership of the RHA. Meanwhile, in a recent interview with Motor Transport, you seemed to offer the view that the RHA were prioritising media appearances over actually influencing government policy. Can you perhaps elaborate on this and explain what kind of approach you are looking for the RHA to adopt?
I think the RHA has behaved in a way which has been quite antagonistic towards the government. In the end, I see their job is to seek to influence government policy on behalf of the transport industry and in the interests of the transport industry. I’m not convinced that is necessarily best achieved by just antagonizing the government.
It felt to me like there has been an overemphasis on wanting to get air time and wanting to be seen to be holding the government to account. But actually, in terms of influencing policy, I think that they’ve damaged their ability to do that by the way that they’ve acted. I think they’ve acted in quite a radical way – to be in a position where in multiple meetings, you take confidential information and leak it to the press [at least one accusation of which the RHA denies].
Not everybody is going to like that and not everyone will think it is a sensible way to carry on. It’s clearly going to seriously damage your relationship with the government. They did that to the point they were excluded from a lot of things by the government, because they couldn’t be trusted to participate in those meetings. Given this, can we say the RHA is really an effective pressure group? In my opinion, no. People might see the RHA on the Today program and see that activity as a good thing. I don’t think it has been a good thing though. What is a good thing is getting things achieved for our industry, not just appearing to be holding the government to account.
In relation to Brexit, it’s not that I thought that they didn’t seek to motivate people to get ready. Instead, I thought that their endless emphasis on the elements that weren’t clear, where they were basically communicating that it wasn’t possible for people to get ready, made it likely that people wouldn’t properly get ready.
The reality was that 99% of what needed to be done was known. People could have got ready for that 99%. The information about the 1% would have been clearer at the end of the negotiation. Instead of banging on about 1%, they should have been telling people to get on with preparing for the 99%.
The RHA going on about unknowns wasn’t going to change the negotiation with the EU. The emphasis should have been to explain that the overwhelming majority of what people had to do was clear, and that there was a need to get on with that. Then we could focus on the bits that weren’t clear at the end.
So, in your opinion, UK hauliers would have been better off preparing for no deal and then taking on board changes brought about by any last minute trade agreement?
Technically, there’s very little difference between this deal and what was required for no deal. In terms of what was required for us, there was hardly any difference.
The real difference between no deal and this deal is that with no deal, there would have been duties applied to a larger proportion of goods. Therefore this deal is technically plus/minus the same as no deal, because a lot of the goods that come from the EU are not of EU origin and therefore do have duties applied. So you have to have all of those mechanisms in place anyway. Preparing for no deal essentially meant that you were prepared for everything that you would need to prepare for.
Now, I’m not saying that they weren’t things that were unclear, but these things were relatively modest in the overall picture. The emphasis should have been to say that “You can prepare, you should be preparing, and these are all the things that you can do to prepare. There will be a small list of things that you can’t prepare for. We’re going to have to wait for those.”
The messaging was all wrong, it looked like it was a case of “let all just attack the government because we hate Brexit,” basically. I just think that was ridiculous considering Brexit was clearly going to happen and the majority of RHA members were in favour of it. We don’t need the RHA there to make political points. They needed to be there to help support people’s preparations for Brexit.
As of January 1st, a lot of additional checks on EU goods arriving into the UK will take place. Looking back on the checks that the EU implemented on British goods this year, one would expect a degree of disruption in the first couple of months before things eventually stabilise as firms become more familiar with the requirements. How do things look from your perspective?
So firstly, as you’ll know, come January, we’ve got the end of delayed declarations. Of course, the government brought in this as an easement. That meant in the first year of us leaving the Customs Union, that you could do import declarations after delivery. However, from the first of January next year, import declarations have to be done prior to delivery.
If you recall, this time last year there was a lot of talk in the press about whether we would run out of goods in the UK and that supermarket shelves might be empty due to the disruption of goods coming into the UK from the EU. They thought that it would happen in January this year. Of course, that didn’t happen – it was never going to happen. It was a massive misunderstanding because of the government easements that were put in place.
Now, those government easements will not apply from January 1st next year, and of course, there are risks of disruption. Import declarations into the UK have to be done prior to delivering the goods. That will create some issues and there will be a few bumps that go around that. Ultimately though, the situation will ease itself out.
Even so, isn’t it ironic that the press made such a big thing about there being a disaster last January, when the government easements that were in place meant that it was never going to happen? Then, when it comes to this January, nobody’s talking about the fact that easements actually do come to an end. So the crunch day is this January yet it seems the media circus has moved on and nobody’s worried about that anymore.
I suspect that whilst there will be some disruption that does happen in the short term, I’m sure that by the end of the first quarter, those things will probably have been dealt with. Then, from the middle of next year, there are also checks on phytosanitary goods. I think that they will have an impact.
Certainly when it comes to the phytosanitary goods that have gone from the UK into the EU, the checks that are required going into the EU have been very disruptive for the movement of that type of goods. I suspect that it will also be disruptive to goods coming into the UK. I imagine the UK authorities will have a pretty light touch in terms of it because they’ve no desire to suddenly start creating disruption to the flow of those goods. Even so, I’m sure the checks will have some kind of impact.
At Europa, we no longer carry phytosanitary goods. We are sort of staying out of that because of some of the complexities. I don’t think there’s any doubt those types of goods have been impacted by Brexit.
What did you make of the cabotage relaxation the UK Government made in October? It sparked a lot of discussion in the haulage industry at the time, and those who were against the move were particularly vocal about it. Some Brexit-supporting hauliers also appeared to be angered by the move as they presumed that they’d have less chance of being undercut by EU hauliers post-Brexit.
I thought under the circumstances, it was a very sensible decision.
We can’t, as an industry, have it every which way. If someone is saying that it’s a nightmare, we can’t get any drivers, peak is not going to happen, goods are not going to be on the shelves, fuel stations will go without fuel, and so on. And then the government says that for a limited period we’re going to relax cabotage regulations in order to soften those issues, they can’t be jumping up and down and saying, “that’s crazy, why would the government do that?”
I get that the industry just wants what’s in its own interests. But at that point, we can’t be arguing that we care whether there are goods on the shelves or anything like that.
What the government did was pull one of the few levers that they have, which is to allow foreign trucks to operate in the UK. Does that mean that all of a sudden, UK hauliers are under some horrendous price pressure, and that they’re all going to lose their businesses and all that kind of thing? No, the market has been absolutely on fire. As we know, it’s been very difficult for people to get trucks, so to be complaining about competition from the EU I think is a bit ridiculous.
What plans do you have in store for 2022?
Well, firstly, this year we developed the EuropaFlow product. We believed that was a really, really effective way of removing friction in terms of moving goods between the UK and Europe. It’s been massively successful. We have been able to win substantial amounts of new business because of that process. So in the road business, one of the biggest things that’s happening is we’ve got a very significant increase in our sales organization happening in the next year.
We’re also opening three new branches for the road business, and I think we’re recruiting somewhere between 35 additional sales people into the road business too, because we believe we’ve got very strong products and that we can expand our market position significantly in the course of the next year.
In terms of the air and sea business, we are expanding our sales team with an additional 9 sales people and opening a new office in Shanghai on January 1st. We are also planning to open two more overseas branches for our air and sea business in 2022.
Then we’re looking to significantly expand the size of the Continental Cargo Carriers business. Since we acquired that business we’ve spent a lot of time turning it around and developing it. We believe we’ve got a really good operating model, which is why we’re expanding in terms of equipment and expecting to develop in that area in the course of next year.
We’ve also got a lot happening in our 3PL warehousing business. Obviously that’s a sector which is extremely busy at the moment. We are, again, looking at some meaningful additional products in that area as well.
So we’ve got a lot going on, we don’t have any plans for acquisitions at this time. Our plans for the next year are about fairly aggressive organic growth. We feel very optimistic about the position that we are currently in as we approach 2022 – we’ve never been anywhere near as strong a position as we are now.